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Knowledge in Development Note: International Migration

International migration, the movement of people across international boundaries, has enormous economic, social and cultural implications in both origin and destination countries. Almost 180 million people—around 3 percent of the world’s population—live outside their country of birth. This includes millions of highly educated people who moved to developed countries from developing countries, many of which already suffer from low levels of human capital. The flow of formal remittances to developing countries reaches $200 billion annually, surpassing foreign aid and representing the largest source of foreign exchange for many countries. These numbers do not include the substantial informal remittance flows. In the case of North-South migration, pressures for international migration are expected to continue and even increase, mainly driven by differences in real incomes and demographic patterns such as population growth rates and age distribution profiles.

Reflecting its rapidly rising economic, political and social significance, migration has become an increasingly important policy question for both developing and developed countries. Yet, policy discussions and recommendations have been hampered by a lack of detailed empirical analysis, in part as a result of the absence of comprehensive and comparable time series data on migration. The World Bank research program has generated several unique databases and associated analysis that have stimulated a better understanding of the impacts of migration on both host and source countries.

What we know

The most important impacts of international migration are the boost in world income and the reductions in the level and severity of poverty

By allowing workers to move to where they are more productive, migration generates an increase in aggregate output and income. Early analysis suggested that free migration could double world income.[1] More recently it has been estimated that a 3 percent increase in immigration to OECD countries would generate gains of more than $150 billion a year.[2] These gains would be evenly split between developed and developing countries and owe more to the mobility of less-skilled than of more-skilled workers. Major gains accrue to the migrants themselves, to consumers and complementary factors of production in the recipient countries (capital, land, and labor, other than the mobile type), and to remittance recipients and labor in the sending country.

Remittances generally reduce poverty and alter the distribution of income, but the extent and direction of these effects depends on who receives them. The evidence on this from a variety of countries (Egypt, India, Mexico, Pakistan, the Philippines) is somewhat mixed though generally positive. Among the more convincing studies are those based on household surveys. For example, the 2003 Mexico National Rural Household Survey suggests that internal and international remittances have an equalizing effect on incomes in high-migration areas but not in low-migration ones, that international remittances reduce rural poverty by more than internal remittances, and that the larger the share of households with migrants in a region, the more favorable the effect of changes in remittances on rural poverty.[3]

Another study of 12 Latin American and Caribbean countries confirms that remittances reduce poverty levels and that this result is robust to the use of counterfactual scenarios that include the potential contribution that the migrant might have made at home. This study also reveals significant country heterogeneity in terms of the poverty alleviation impact of remittances. Factors that may lead to a particular outcome in a given country include the percentage of households receiving remittances, the share of those with remittances belonging to the lowest quintiles of the income distribution, and the dollar amount of remittances relative to GDP.[4]

Increased remittances to the Philippines led to enhanced human capital accumulation and entrepreneurship in origin households, with greater child schooling, less child labor, more hours worked in self-employment, and a higher rate of entry into capital-intensive enterprises.[5]

Similar findings have been obtained for other countries. Thus, a LAC study shows positive impact on educational expenditures among middle and upper-class households and in households with low parental schooling. Detailed evidence from Pakistan shows that children from migrant households are more likely to attend school, stay in school during the age range of peak dropout rates, have higher completed grades, and progress through school at a significantly higher rate than children in nonimmigrant households. A key finding in Pakistan is that these positive impacts on educational attainment are substantially larger for girls than boys.[6]

Remittances have a positive effect on child health (weight for age, height for age, child delivery by a doctor and vaccinations) in Nicaragua and Guatemala. Households in Guatemala receiving remittances improve all health measures and inputs, while doctor-assisted child delivery increases in Nicaragua. The same findings are confirmed in Pakistan, where gains in health outcomes again are greater for girls than for boys.

Migration also affects incentives to invest in physical capital. In Pakistan, investments in nonfarm enterprises, major farm machinery, and agricultural land all declined while migration was ongoing but increased substantially once the migration episode was concluded and the migrant returned home.[7]

The destination of migration may affect source country fertility differentially

A recent study from the Middle East and North Africa region shows statistically significant differences between migration and source country fertility depending on the destination of migrants.[8] Morocco and Turkey, where migration is mainly to Western Europe, have experienced a decline in fertility, while Egypt—whose migrants have mostly gone to Persian Gulf states, a more conservative region—has not.

Small and low-income countries are affected differently from brain drain

A new global database produced by the migration research program shows a huge brain drain from small poor nations in the Caribbean, Sub-Saharan Africa, and the Pacific regions. The highest rates are found in the Caribbean, with over 80 percent of university graduates from Guyana, Jamaica, and Haiti living outside their country of origin.

One of the most debated migration issues is the impact of physicians and nurses from disease-burdened developing countries migrating to high-income nations. A recent World Bank database on physicians’ emigration during 1991-2004 has shed greater light on this “brain drain” problem.[9]

Research using these new data concludes that small and low-income countries are also the most affected by medical brain drain and that it drastically increased during 1991-2004. The most affected regions are the Middle East and North Africa, South Asia, and Sub-Saharan Africa. Twelve of the 30 most affected countries in 2004 are located in Sub-Saharan Africa, with severe increases in the emigration rates of physicians in Malawi, Togo, Zambia, and Zimbabwe.

Migrants earn a wage premium upon return to their home country and are more likely to do so as economic and political conditions there improve

Out-migration from Norway increases and return of migrants to Norway declines, as economic and political conditions in source countries improve.[10] Evidence from Egypt shows that those migrants who return home earn close to 40 percent more than non-migrants.[11] This finding suggests that temporary migration could provide a “win-win-win” opportunity where host countries benefit from importing needed labor for a period of time, source countries benefits from the enhanced human capital of return migrants, and migrants benefit from higher incomes in the host country as well as upon their return to their country of origin.

Job offer requirements have little impact on migrants who are well-connected in the destination country

Many countries have policies limiting migration, often seeking to attract more productive workers. Research on New Zealand finds that requiring potential migrants to have a job offer as a condition for entry reduces migration. A disproportionate share of accepted migrants obtained job offers from family members or others with whom there was a prior relationship.[12] Host countries need to consider whether their specific migration policy takes such selection effects into account so avoid working at cross-purposes.

Recent research

Improving data to allow better policy research and analysis

A major contribution of the Bank’s research program on migration is the development of several new databases. The first is the most comprehensive database on the brain drain to date. It provides consistent measures of the brain drain from individual sending countries to individual destination countries—bilateral measures of the brain drain—as well as regional and global aggregations.[13] This database also includes information on educational attainment of migrants. The database is going to be extended to add data for earlier periods, and disaggregating it by gender and by the country where education was acquired.

A second database centers on migration of health care workers (physicians) for 192 countries during 1991-2004.[14] Another global database compiled by the Bank migration research team in collaboration with Sussex University contains a matrix of bilateral migrant stocks for 226 countries for the year 2000/2001.[15] This database is the first to include bilateral data on South-South migration, and according to the different legal definitions of a migrant used by governments and multilateral agencies. This dataset is being extended on several dimensions, including additional time periods, age of migrants, and their gender.

These databases are complemented by ongoing efforts to include migration modules in household surveys. The program has completed three surveys with information on migrants (Brazil, Ghana, and Pakistan). These surveys provide very detailed household data which are used as a basis for analyzing migration and remittance patterns, and of the determinants and development impact of migration, including poverty alleviation, investment in human and physical capital, labor market participation decisions, and remittance patterns.

Another major contribution of the Bank’s migration research program is improvements in survey design and empirical methodology. For instance, in the context of Japanese-Brazilian families of potential migrants to Japan, three types of surveys were conducted in order to examine how well the cheaper (snowball and intercept) surveys perform relative to the much more expensive census-based representative survey, in terms of information on migrant and household characteristics, remittances, and return migration. Second, a household survey in Tonga to study migration to New Zealand and the impact of its migration lottery enabled a comparison of the results of a natural experiment and those of the best empirical methodology available. Third, panel data in household surveys that include a migration module are very valuable but extremely rare.

Newer research areas

About half of the world’s migrant population is female. Available evidence suggests that migration flows and their impacts are strongly gendered. However, relatively little gender analysis has been done in the economic literature on international migration and development. Bank research has ongoing work on international migration of women, including an in-depth study of the magnitude, consequences, and impacts of women’s migration in Sri Lanka.

Published in 2008, The International Migration of Women provides new information on the gendered determinants and impacts of migration and remittances of women as well as on their patterns of labor market participation. The book investigates a range of migration-related issues including:

Determinants of migration of women. The determinants of international migration differ between men and women. Research on determinants of migration in rural Mexico found that, overall, women less likely to migrate abroad and their level of education is positively associated with international migration to non-agriculture jobs. Such association doesn’t hold for male migrants. Moreover, age deters international migration slightly more for men than for women.

Female migrants impact on country of origin and households. The literature on intra-household expenditures finds striking differences between the impacts of male migration and female migration on production activities. For example, nonstaple food production is negatively associated with male migration but not with female migration. A study on migration and remittances in Ghana investigated whether the sex of the household heads has any impact on household expenditure allocations in these households. Comparing female-headed households receiving remittances to those headed by males, the study found that women tend to spend larger share of their budget on education and health and a larger share on durable goods. Thus if female migration raises women’s level of empowerment and income, it might be expected to generate more benefits for the household compared to migration of men.

Participation of women migrants in the labor market. A study that explores the labor market participation and performance of women migrants in the U.S. found that there is a significant variation in labor market participation and performance of female migrants according to their country of origin. African and Eastern European migrants have higher levels of participation, but lower levels of performance. Asian and Middle Eastern women have low levels of participation and high levels of performance. Women educated in Western Europe and the United States perform much better in every dimension, mainly due to the higher human capital provided by their education. Nevertheless, education levels are the most important variables influencing labor market outcomes, regardless of where they were obtained. An extra year of education, even if obtained in a developing country, increases performance significantly. Other social and demographic variables, such as marital status and number of children, have the expected impact on participation levels, but almost no effect on performances.

Brain drain and educational expenditure, evidence from Ghana

A study on brain drain of health care workers from Ghana aimed to shed some light into the observed patterns of international migration and provide an estimate of the loss in educational expenditures due to migration. The study confirmed the overwhelming preference among the more educated toward migrating to OECD countries. The paper also found evidence of brain waste: among Ghanaian migrants to OECD countries many cannot find occupations that reflect their educational qualifications. Although international migrants comprise only 1.91 percent of the total population, the loss in education expenditure due to migration can be estimated at 8.07 percent of total expenditure on education on the current population. Therefore, it is important to design appropriate policies for the retention of educated human capital in Ghana.

The cost of medical brain drain is high for developing countries

The training of doctors and nurses is almost always publicly funded. Government resources are already stretched in most countries, and higher education consumes a large portion of an already strained budget. For developing countries already suffering from some of the most challenging healthcare problems, the loss of health professionals is an additional blow.

One paper sought to determine the macroeconomic impacts of migration of skilled medical personnel from a receiving country's perspective. Using simple diagrams, an expansion of the health sector by recruiting immigrant skilled workers in certain cases is shown to compare favorably to the (short-term) long-term alternative of using domestic (unskilled) workers. From a formal analysis, changes in non-health outputs are shown to depend on factor-bias and scale effects. The main finding from the applied model is that importing foreign doctors and nurses into the United Kingdom yields higher overall welfare gains than a generic increase in health budget.

Of all the groups of skilled migrants that left and continue to leave African countries each year, none has triggered more widespread concern than health professionals. A new research project aims to collect data and solid evidence on trends and patterns of migration among physicians in Sub-Saharan (both within countries and between countries) and from Sub-Saharan Africa to OECD countries. Such analysis will provide policy makers with important information to formulate policies, and increase cross-country coordination with relation to retention and education of health providers across the continent.

What is the impact of brain drain on institutional development?

Recent research shows that the total emigration rate improves institutional quality. Moreover, if unskilled migration always has a positive effect on institutional quality, skilled migration has an ambiguous impact on institutional quality. Simulations show that skilled emigration rate has a general positive impact on institutional quality (except for some small Caribbean countries).[16]

What are the linkages between trade, foreign direct investment, and migration flows?

While barriers to trade in most goods and some services, including capital flows, have been removed over the past two decades, many barriers to worker mobility remain. Such policies are particularly harmful to the world’s poorest people. Recent work investigates how costly those anti-poor trade policies are and examined possible strategies to reduce remaining distortions. Two opportunities in particular are addressed: completing the Doha Development Agenda process at the World Trade Organization (WTO), and freeing up the international movement of workers. The initial research suggests that these opportunities could generate huge social benefit/cost ratios that are considerably higher than the direct economic ones quantified in the study, even without factoring in their contribution to alleviating several of the other challenges identified, including malnutrition, disease, poor education and air pollution.[17]

International migration database

A new International Migration Database (IMD), being developed in collaboration with the United Nations Population division, will represent the most comprehensive source for studying international bilateral migration trends, over time, and disaggregated by both age and gender. The IMD will spans some five decades up to the 2000 census round, and although coverage varies, on average most countries should have at least three data points.